RIYADH
Organization of the
Petroleum Exporting Countries (Opec) will not cut oil production even if
the price drops to $20 a barrel, and it is unfair to expect the cartel
to reduce output if non-members do not, Saudi Arabia said.
“Whether
it goes down to $20 a barrel, $40, $50, $60, it is irrelevant,” the
kingdom’s Oil minister Ali al-Naimi said in an interview with the Middle
East Economic Survey, an industry weekly.
In unusually
detailed comments, Naimi defended a decision by Opec, whose lead
producer is Saudi Arabia, last month to maintain a production ceiling of
30 million barrels per day.
The decision sent global crude prices tumbling, worsening a price drop that has seen them fall by around 50 per cent since June.
BALANCING DEMAND
Saudi
Arabia has traditionally acted to balance demand and supply in the
global oil market because it is the only country with substantial spare
production capacity, according to the International Monetary Fund.
The
kingdom pumps about 9.6 million barrels per day but Naimi said it is
“crooked logic” to expect his country to cut and then lose business to
other major producers outside Opec.
The increasingly
competitive global oil market has seen daily United States oil output
rise by more than 40 per cent since 2006, but at a production cost which
can be three or four times that of extracting Middle Eastern oil.
“Is
it reasonable for a highly efficient producer to reduce output, while
the producer of poor efficiency continues to produce?” Naimi asked
during the interview conducted with MEES on Sunday.
“If
I reduce, what happens to my market share? The price will go up and the
Russians, the Brazilians, US shale oil producers will take my share.
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